Institutional investors betting big on Indian housing, investments up 71%

The share of domestic investors accounted for 71% of total institutional investments received in the July-September quarter: Vestian

Institutional investments in India's residential sector jumped 71 per cent to $298.3 million in the July-September quarter compared to $174.3 million in the same quarter last year, a report released by workplace solutions organisation Vestian on Thursday showed.

According to the "Institutional Investment in Indian Real Estate Q3 2023" report, overall, the Indian real estate sector received institutional investments worth $679.9 million during the quarter, up 82 per cent from the same period last year when inflow was $374.3 million. However, it was 57 per cent lower when compared to the previous quarter due to a significant decline in foreign fund inflow.

 

Commercial assets saw 9.4 per cent higher institutional investment during the quarter at $164.1 million. The investment was, however, down 46 per cent in the diversified asset class to $27.2 million from $50 million last year.

The share of domestic investors accounted for 71 per cent of total institutional investments received in the quarter. On the other hand, the share of foreign investors reduced to 27 per cent, down from 55 per cent in July-September 2022.

Commenting on the report, Shrinivas Rao, chief executive officer at Vestian said, "Institutional investments have slowed down during the September quarter due to limited interest from foreign investors amid a challenging global macroeconomic landscape."

However, Rao noted that large conglomerates are calling their employees back to the office, which may inflate demand for office spaces across the country. "As a result, upcoming quarters may witness increased investments on the back of this renewed demand from the office sector."

Across various asset classes, the residential sector attracted the highest institutional investments during the quarter, although the share has reduced to 44 per cent from 47 per cent a year earlier.

The share of commercial assets (office space, co-working, retail, and hotels) declined to 24 per cent from 40 per cent in July-September 2022. On the other hand, the share for the industrial and warehousing sector increased significantly to 28 per cent in the quarter from a negligible share last year.

According to Vestian, the Centre's push for the "Make in India" campaign and the growing popularity of e-commerce resulted in increased demand for industrial spaces and warehouses across the country, Vestian said. "This led to significant interest from large investors."